Superior Energy Services Announces Fourth Quarter and Full Year 2018 Results
Negative fourth quarter results were driven in part by the recording of a pre-tax charge of
For the year ended
“The fourth quarter was the first period in 2018 in which U.S. land markets experienced lower sequential activity levels and utilization,” noted
“Our customers continue to realign their priorities as shale exploitation matures after more than a decade of explosive growth. This is evident in our customers increasing focus on free cash flow and returns over absolute growth. As 2018 demonstrated, the transition from a growth emphasis to a more disciplined orientation can be disruptive to service profitability. The disruption experienced in the fourth quarter was further exacerbated by the volatility of oil prices and excess fracturing capacity. We believe large scale, mature, shale development programs are an excellent opportunity for Superior Energy in the years to come. However, in recognition of the excess capacity in the market, we will limit our investment in these capital intensive completion oriented service lines.
“In the Gulf of
“Internationally, we continue to be encouraged by increasing activity levels as well as visibility towards future opportunities. During the fourth quarter, hydraulic workover activity improved in
“Our spending levels declined during the fourth quarter as we expect U.S. land markets to remain volatile over the near-term. Given this outlook, and our objective of maintaining future capital spending within operating cash flows, we expect that an increasing percentage of our expenditures will be directed towards our cornerstone franchises with global reach that are more likely to consistently generate free cash flow and returns in the current environment.”
Fourth Quarter 2018 Geographic Breakdown
U.S. land revenue was
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the fourth quarter of 2018 was
U.S. land revenue increased 2% sequentially to
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the fourth quarter of 2018 was
Production Services Segment
The Production Services segment revenue in the fourth quarter of 2018 was
U.S. land revenue of
Technical Solutions Segment
The Technical Solutions segment revenue in the fourth quarter of 2018 was
U.S. land revenue decreased 5% sequentially to
Conference Call Information
The Company will host a conference call at
About
This press release contains, and future oral or written statements or press releases by us and our management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from such statements. Such risks and uncertainties include, but are not limited to: the conditions in the oil and gas industry, especially oil and natural gas prices and capital expenditures by oil and gas companies; our outstanding debt obligations and the potential effect of limiting our ability to fund future growth and operations and increasing our exposure to risk during adverse economic conditions; necessary capital financing may not be available at economic rates or at all; volatility of our common stock; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage for which we may have limited or no insurance coverage or indemnification rights; we may not be fully indemnified against losses incurred due to catastrophic events; claims, litigation or other proceedings that require cash payments or could impair our financial condition; credit risk associated with our customer base; the effect of regulatory programs (including regarding worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of hydraulic fracturing could reduce demand for our pressure pumping and fluid management services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; the impact that unfavorable or unusual weather conditions could have on our operations; the potential inability to retain key employees and skilled workers; political, legal, economic and other risks and uncertainties associated with our international operations; laws, regulations or practices in foreign countries could materially restrict our operations or expose us to additional risks; potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results; changes in competitive and technological factors affecting our operations; risks associated with the uncertainty of macroeconomic and business conditions worldwide; not realizing the benefits of acquisitions or divestitures; our operations may be subject to cyber-attacks that could have an adverse effect on our business operations; counterparty risks associated with reliance on key suppliers; challenges with estimating our potential liabilities related to our oil and natural gas property; and risks associated with potential changes of
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except earnings per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | September 30, | December 31, | |||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||
Revenues | $ | 539,331 | $ | 497,043 | $ | 573,068 | $ | 2,130,265 | $ | 1,874,076 | |||||
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) | 384,445 | 356,628 | 404,389 | 1,502,104 | 1,398,695 | ||||||||||
Depreciation, depletion, amortization and accretion | 97,264 | 107,565 | 99,892 | 400,848 | 438,716 | ||||||||||
General and administrative expenses | 74,641 | 68,934 | 68,895 | 289,252 | 295,507 | ||||||||||
Reduction in value of assets | 739,725 | 4,202 | - | 739,725 | 14,155 | ||||||||||
Loss from operations | (756,744) | (40,286) | (108) | (801,664) | (272,997) | ||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (24,745) | (24,776) | (24,952) | (99,477) | (101,455) | ||||||||||
Other income (expense) | 2,717 | (822) | (277) | (1,678) | (3,299) | ||||||||||
Loss from continuing operations before income taxes | (778,772) | (65,884) | (25,337) | (902,819) | (377,751) | ||||||||||
Income taxes | (28,587) | (87,762) | (3,521) | (45,433) | (190,740) | ||||||||||
Net income (loss) from continuing operations | (750,185) | 21,878 | (21,816) | (857,386) | (187,011) | ||||||||||
Income (loss) from discontinued operations, net of income tax | - | (13,285) | - | (729) | (18,910) | ||||||||||
Net income (loss) | $ | (750,185) | $ | 8,593 | $ | (21,816) | $ | (858,115) | $ | (205,921) | |||||
Basic and Diluted earnings (losses) per share: | |||||||||||||||
Net income (loss) from continuing operations | $ | (4.85) | $ | 0.14 | $ | (0.14) | $ | (5.55) | $ | (1.22) | |||||
Loss from discontinued operations | - | (0.08) | - | (0.01) | (0.13) | ||||||||||
Net income (loss) | $ | (4.85) | $ | 0.06 | $ | (0.14) | $ | (5.56) | $ | (1.35) | |||||
Diluted earnings (losses) per share: | |||||||||||||||
Net income (loss) from continuing operations | $ | (4.85) | $ | 0.14 | $ | 0.14 | $ | (5.55) | $ | (1.22) | |||||
Loss from discontinued operations | - | (0.08) | - | (0.01) | (0.13) | ||||||||||
Net income (loss) | $ | (4.85) | $ | 0.06 | $ | 0.14 | $ | (5.56) | $ | (1.35) | |||||
Weighted average common shares: | |||||||||||||||
Basic and Diluted | 154,536 | 153,085 | 154,529 | 154,367 | 152,933 | ||||||||||
Diluted | 154,536 | 154,277 | 154,529 | 154,367 | 152,933 |
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
12/31/2018 | 12/31/2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 158,050 | $ | 172,000 | |||
Accounts receivable, net | 447,353 | 398,056 | |||||
Income taxes receivable | - | 959 | |||||
Prepaid expenses | 45,802 | 42,128 | |||||
Inventory and other current assets | 121,700 | 134,032 | |||||
Assets held for sale | - | 13,644 | |||||
Total current assets | 772,905 | 760,819 | |||||
Property, plant and equipment, net | 1,109,126 | 1,316,944 | |||||
Goodwill | 136,788 | 807,860 | |||||
Notes receivable | 63,993 | 60,149 | |||||
Restricted cash | 5,698 | 20,483 | |||||
Intangible and other long-term assets, net | 127,452 | 143,970 | |||||
Total assets | $ | 2,215,962 | $ | 3,110,225 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 139,325 | $ | 119,716 | |||
Accrued expenses | 219,180 | 221,757 | |||||
Income taxes payable | 734 | - | |||||
Current portion of decommissioning liabilities | 3,538 | 27,261 | |||||
Liabilities held for sale | - | 6,463 | |||||
Total current liabilities | 362,777 | 375,197 | |||||
Deferred income taxes | - | 61,058 | |||||
Decommissioning liabilities | 126,558 | 103,136 | |||||
Long-term debt, net | 1,282,921 | 1,279,771 | |||||
Other long-term liabilities | 152,967 | 158,634 | |||||
Total stockholders' equity | 290,739 | 1,132,429 | |||||
Total liabilities and stockholders' equity | $ | 2,215,962 | $ | 3,110,225 | |||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
TWELVE MONTHS ENDED DECEMBER 31, 2018 AND 2017 | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (858,115) | $ | (205,921) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, depletion, amortization and accretion | 400,848 | 438,716 | |||||
Reduction in value of assets | 739,725 | - | |||||
Other noncash items | (39,152) | (129,390) | |||||
Changes in working capital and other | (78,249) | (6,979) | |||||
Net cash provided by operating activities | 165,057 | 96,426 | |||||
Cash flows from investing activities: | |||||||
Payments for capital expenditures | (221,370) | (164,933) | |||||
Other | 33,299 | 28,269 | |||||
Net cash used in investing activities | (188,071) | (136,664) | |||||
Cash flows from financing activities: | |||||||
Other | (2,586) | (17,025) | |||||
Net cash used in financing activities | (2,586) | (17,025) | |||||
Effect of exchange rate changes in cash | (3,135) | 3,654 | |||||
Net decrease in cash, cash equivalents, and restricted cash | (28,735) | (53,609) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 192,483 | 246,092 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 163,748 | $ | 192,483 | |||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three months ended, | ||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||
U.S. land | ||||||||||
Drilling Products and Services | $ | 46,732 | $ | 45,605 | $ | 35,146 | ||||
Onshore Completion and Workover Services | 255,056 | 294,869 | 232,720 | |||||||
Production Services | 47,103 | 47,858 | 55,010 | |||||||
Technical Solutions | 7,993 | 8,453 | 8,161 | |||||||
Total U.S. land | $ | 356,884 | $ | 396,785 | $ | 331,037 | ||||
Gulf of Mexico | ||||||||||
Drilling Products and Services | $ | 30,540 | $ | 26,065 | $ | 22,521 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 18,603 | 16,776 | 19,864 | |||||||
Technical Solutions | 40,325 | 47,286 | 34,027 | |||||||
Total Gulf of Mexico | $ | 89,468 | $ | 90,127 | $ | 76,412 | ||||
International | ||||||||||
Drilling Products and Services | $ | 28,028 | $ | 27,514 | $ | 21,559 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 44,228 | 41,236 | 43,363 | |||||||
Technical Solutions | 20,723 | 17,406 | 24,672 | |||||||
Total International | $ | 92,979 | $ | 86,156 | $ | 89,594 | ||||
Total Revenues | $ | 539,331 | $ | 573,068 | $ | 497,043 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
SEGMENT HIGHLIGHTS | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three months ended, | ||||||||||
Revenues | December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||
Drilling Products and Services | $ | 105,300 | $ | 99,184 | $ | 79,226 | ||||
Onshore Completion and Workover Services | 255,056 | 294,869 | 232,720 | |||||||
Production Services | 109,934 | 105,870 | 118,237 | |||||||
Technical Solutions | 69,041 | 73,145 | 66,860 | |||||||
Total Revenues | $ | 539,331 | $ | 573,068 | $ | 497,043 | ||||
Adjusted Income (Loss) from Operations (1) | ||||||||||
Drilling Products and Services | $ | 27,143 | $ | 20,255 | $ | 340 | ||||
Onshore Completion and Workover Services | (15,637) | 2,767 | (9,888) | |||||||
Production Services | (3,893) | (5,998) | (6,464) | |||||||
Technical Solutions | 6,356 | 8,962 | 3,176 | |||||||
Corporate and other | (27,054) | (26,094) | (23,248) | |||||||
Total Adjusted Income (Loss) from Operations | $ | (13,085) | $ | (108) | $ | (36,084) | ||||
Adjusted EBITDA (1) | ||||||||||
Drilling Products and Services | $ | 53,193 | $ | 48,085 | $ | 31,547 | ||||
Onshore Completion and Workover Services | 32,578 | 50,066 | 41,311 | |||||||
Production Services | 12,432 | 11,087 | 12,420 | |||||||
Technical Solutions | 11,677 | 15,291 | 8,022 | |||||||
Corporate and other | (25,701) | (24,745) | (21,819) | |||||||
Total Adjusted EBITDA | $ | 84,179 | $ | 99,784 | $ | 71,481 | ||||
(1) Adjusted income (loss) from operations and adjusted EBITDA exclude the impact of reduction in value of assets and other items for the three months ended December 31, 2018 and 2017. For Non-GAAP reconciliations, refer to Table 2 below. |
Non-GAAP Financial Measures
The following table reconciles net income/loss from continuing operations, which is the directly comparable financial measure determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from continuing operations (non-GAAP financial measure). This financial measure is provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of Consolidated Adjusted Net Loss From Continuing Operations | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Table 1 | ||||||||||||
Three months ended, | ||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||
Consolidated | Per Share | Consolidated | Per Share | |||||||||
Reported net income (loss) from continuing operations | $ | (750,185) | $ | (4.85) | $ | 21,878 | $ | 0.14 | ||||
Reduction in value of assets | 739,725 | 4.79 | 4,202 | 0.02 | ||||||||
Restructuring costs | 3,934 | 0.02 | - | - | ||||||||
Income taxes | (24,082) | (0.16) | (716) | - | ||||||||
US Tax Reform (1) | - | - | (76,529) | (0.49) | ||||||||
Adjusted net loss from continuing operations | $ | (30,608) | $ | (0.20) | $ | (51,165) | $ | (0.33) | ||||
(1) Recorded in Income Taxes in the consolidated statement of operations. | ||||||||||||
The following table reconciles net income/loss from continuing operations by segment, which is the directly comparable financial measure determined in accordance with GAAP, to adjusted income/loss from operations and adjusted EBITDA by segment (non-GAAP financial measures). These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Table 2 | |||||||||||||||||||
Three months ended December 31, 2018 | |||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||
Reported net income (loss) from continuing operations | $ | 26,678 | $ | (662,061) | $ | (97,425) | $ | 7,280 | $ | (24,657) | $ | (750,185) | |||||||
Reduction in value of assets | - | 644,813 | 92,252 | - | 2,660 | 739,725 | |||||||||||||
Restructuring costs | 465 | 1,611 | 1,280 | 78 | 500 | 3,934 | |||||||||||||
Interest expense, net | - | - | - | (1,002) | 25,747 | 24,745 | |||||||||||||
Other expense | - | - | - | - | (2,717) | (2,717) | |||||||||||||
Income taxes | - | - | - | - | (28,587) | (28,587) | |||||||||||||
Adjusted income (loss) from operations | $ | 27,143 | $ | (15,637) | $ | (3,893) | $ | 6,356 | $ | (27,054) | $ | (13,085) | |||||||
Depreciation, depletion, amortization and accretion |
26,050 | 48,215 | 16,325 | 5,321 | 1,353 | 97,264 | |||||||||||||
Adjusted EBITDA | $ | 53,193 | $ | 32,578 | $ | 12,432 | $ | 11,677 | $ | (25,701) | $ | 84,179 | |||||||
Three months ended September 30, 2018 | |||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||
Reported net income (loss) from continuing operations | $ | 20,255 | $ | 2,767 | $ | (5,998) | $ | 9,948 | $ | (48,788) | $ | (21,816) | |||||||
Interest expense, net | - | - | - | (986) | 25,938 | 24,952 | |||||||||||||
Other expense | - | - | - | - | 277 | 277 | |||||||||||||
Income taxes | - | - | - | - | (3,521) | (3,521) | |||||||||||||
Income (loss) from operations | $ | 20,255 | $ | 2,767 | $ | (5,998) | $ | 8,962 | $ | (26,094) | $ | (108) | |||||||
Depreciation, depletion, amortization and accretion |
27,830 | 47,299 | 17,085 | 6,329 | 1,349 | 99,892 | |||||||||||||
EBITDA | $ | 48,085 | $ | 50,066 | $ | 11,087 | $ | 15,291 | $ | (24,745) | $ | 99,784 | |||||||
Three months ended December 31, 2017 | |||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||
Reported net income (loss) from continuing operations | $ | (1,016) | $ | (12,734) | $ | (6,464) | $ | 4,116 | $ | 37,976 | $ | 21,878 | |||||||
Reduction in value of assets | 1,356 | 2,846 | - | - | - | 4,202 | |||||||||||||
Interest expense, net | - | - | - | (940) | 25,716 | 24,776 | |||||||||||||
Other expense | - | - | - | - | 822 | 822 | |||||||||||||
Income taxes | - | - | - | - | (87,762) | (87,762) | |||||||||||||
Adjusted income (loss) from operations | $ | 340 | $ | (9,888) | $ | (6,464) | $ | 3,176 | $ | (23,248) | $ | (36,084) | |||||||
Depreciation, depletion, amortization and accretion |
31,207 | 51,199 | 18,884 | 4,846 | 1,429 | 107,565 | |||||||||||||
Adjusted EBITDA | $ | 31,547 | $ | 41,311 | $ | 12,420 | $ | 8,022 | $ | (21,819) | $ | 71,481 | |||||||
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